India and New Zealand announced Monday they have concluded a free trade agreement that will eliminate tariffs on most goods traded between the two countries, seeking to deepen economic ties at a time of mounting global trade uncertainties.

The deal, negotiated over nine months, will be formally signed in the first half of 2026 following a legal review of the negotiated text, according to India's chief negotiator Petal Dhillon. Both governments described the agreement as a framework for expanded cooperation across goods, services and investments.

"Concluded in just nine months, this historic milestone reflects a strong political will and shared ambition to deepen economic ties between our two countries," Indian Prime Minister Narendra Modi said in a social media post.

New Zealand Prime Minister Christopher Luxon called the benefits "wide-ranging and significant."

"India is the world's most populous country and is the fastest-growing big economy, and that creates opportunities for jobs for Kiwis, exports and growth," Luxon said in a statement.

The agreement eliminates or reduces tariffs on 95 percent of New Zealand's exports to India, with more than half of products becoming duty-free on the first day the pact takes effect. India gains zero-duty access for all of its goods exported to New Zealand.

Terms of the agreement

Under the deal, New Zealand has committed to invest $20 billion in India over the next 15 years. The agreement also includes provisions for mobility of professionals, skilled workers and students from India to New Zealand.

India's major sectors expected to benefit from tariff-free exports include textiles and apparel, engineering goods, leather and footwear, marine products, gems and jewelry, handicrafts and automobiles.

New Zealand's primary gains will come in horticulture, wood products, coal and sheep wool and meat. New Zealand Trade and Investment Minister Todd McClay said the deal provides access to Indian markets that no other country has secured.

"New Zealand is the first country to secure any access for apples and honey into India in an FTA," McClay said. "We have secured the best access for kiwi fruit into India of any country in the world."

To protect domestic farmers and industry, India excluded several product categories from the agreement. These include dairy imports such as milk, cream, whey, yogurt and cheese, as well as coffee, onions, sugar, spices, edible oils, rubber and goat meat.

Two-way merchandise trade between India and New Zealand stood at $1.3 billion in fiscal year 2024-25, while total trade in goods and services reached $2.4 billion in 2024. Pharmaceuticals from India and forestry and agricultural products from New Zealand make up the bulk of current trade.

Both governments said they aim to double bilateral trade within five years.

Political opposition in New Zealand

Parliamentary approval in New Zealand is not assured. New Zealand First, a far-right populist party that holds eight seats in the 123-seat parliament and serves as a coalition partner to the governing National Party, has announced it will vote against the deal.

Party leader Winston Peters said the agreement "gives too much away, especially on immigration, and does not get enough in return for New Zealanders, including on dairy."

The governing coalition holds 67 seats, but the National Party controls only 48 and relies on support from coalition partners including New Zealand First to pass legislation.

Luxon said he expects New Zealand's exports to India to increase by $1.1 billion to $1.3 billion annually over the next two decades as a result of the agreement.

"Boosting trade means more Kiwi jobs, higher wages and more opportunities for hard working New Zealanders," Luxon said.

India's broader trade strategy

The New Zealand deal marks India's third free trade agreement this year. New Delhi signed a comprehensive economic partnership agreement with Oman last week and concluded a trade pact with the United Kingdom in May.

India has been accelerating negotiations with partner countries to diversify its exports after Washington imposed 50 percent tariffs on Indian goods entering American markets. The tariffs, which went into effect in August, include an additional 25 percent levy on India for its continued purchases of discounted Russian oil.

India has been the second largest importer of Russian crude after China, drawing criticism from Washington that it was helping finance Moscow's war effort against Ukraine.

Since the steep tariffs came into force, India's exports to the United States fell nearly 12 percent in September and 8.5 percent in October before rebounding with 22.6 percent growth in November.

India is now in advanced talks with the European Union and Chile, among others, and hopes to finalize terms to negotiate a pact with Canada. New Delhi is also working on a bilateral trade agreement with the United States.

Indian Commerce Minister Piyush Goyal said the agreement demonstrates India is "rapidly expanding" its trade relations with countries that complement the Indian economy rather than competing with it.

"Today this Free Trade Agreement is about building trade around people and launching opportunities," Goyal said. The deal will give Indian businesses and youth an opportunity to "learn, work and grow on a global stage."

Economic context

Trade analysts have noted that given the relatively modest scale of bilateral trade between India and New Zealand, the agreement functions more as a framework for deeper cooperation than a major trade breakthrough.

"Given the limited scale of bilateral trade, the agreement is less a trade breakthrough than a framework for deeper cooperation," trade analyst Ajay Srivastava said.

India's total goods trade exceeded $1 trillion in fiscal year 2024-25, dwarfing the current trade volume with New Zealand.

The deal fulfills a 2022 election promise from New Zealand's National Party that if elected it would finalize a trade agreement with India in its first term.

Ranjeet Mehta, chief executive officer and secretary general of Indian industry body PHDCCI, said the trade pact "provides policy certainty and lowers input costs for manufacturing, creating a vision for long-term economic resilience."

India's Commerce Ministry said the agreement "provides a stable and predictable framework to unlock the full potential of this relationship."

The stepped-up negotiations come as Indian exporters face pressure from higher U.S. import tariffs, which have weighed on sectors such as textiles, auto components, metals and labor-intensive manufacturing.

India signed comprehensive economic cooperation and trade agreements with the United Arab Emirates and Australia in recent years, lifting bilateral trade with both countries. New Delhi is betting that a wider network of trade agreements will help cushion external shocks and anchor its export ambitions as global commerce faces strains from unpredictable tariffs and geopolitical tensions.